Key Takeaways
- Sandisk fell 24% in a week after the midterms and a Qualcomm warning on memory costs, and Micron and SK hynix fell too.
- Sandisk’s own quarter held up, but its flash price gains are slowing.
- Estimates haven’t moved, and at under 4x earnings the stock looks like a buy in pieces.
Sandisk (SNDK) stock is down 24% in the past week, with no news of its own. The selling came from Washington and from Qualcomm (QCOM). Its handset chip revenue fell 26% to $5.14 billion, partly as its Apple business wound down, and Qualcomm pointed to “industry-wide memory dynamics on the global smartphone market.”
Micron (MU) fell 15% over the same week, and SK hynix (SKHY) 14%.
First Washington, then Qualcomm
Democrats swept the midterms on Nov. 3, and many winning governors ran on pledges to get tougher on data-center construction. UBS then put about 30% of the US data-center capacity due in 2028 at risk from building pauses. Data center was 43.5% of Sandisk’s revenue last quarter.
Qualcomm reported after the close on Nov. 4, and Sandisk lost 22% the next day. Edge and consumer, mostly phones and PCs, made up the other 56.5% of its revenue. If memory prices push phone makers to build fewer phones, Sandisk will feel it too.
Micron is in the same spot, since phone and PC makers bring in about a quarter of its revenue. SK hynix, though, still sees memory demand running ahead of supply through 2030. If it’s right, the whole group sold off too hard.
Sandisk’s own numbers held up
In the quarter to Oct. 2, Sandisk’s revenue rose 23% from the quarter before to $11.0 billion, with an 85.1% non-GAAP gross margin. But the surge is slowing: Kioxia, Sandisk’s fab partner, said its NAND price gains slowed to the mid-20s percent, from about 70%.
Analysts haven’t cut their estimates. Consensus has normalized EPS more than tripling to $227.48 in fiscal 2027, which ends next June:
(Those are pre-split figures. Sandisk’s 8-for-1 split shares start trading Nov. 20.)
TIKR tracks 25 analysts on Sandisk. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Sandisk, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Sandisk’s Analyst Ratings
Load up, a piece at a time
Sandisk trades at about 3.6x forward earnings. That’s near its one-year low and about a third of its 10x average:
The cushion is $88.9 billion of multiyear contracts at floor prices, and management says those floors keep its gross margin around 80%. Sandisk also has no debt.
The risk is that those contracts have never been through a downturn, and flash is a brutal cycle. Still, at under 4x, the stock prices in a bust its estimates and contracts don’t show, so I’d buy in pieces. The test comes in late January, when Sandisk guides for the March quarter, usually its weakest. Analysts expect $12.48 billion.
So what is Sandisk stock actually worth?
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Disclaimer:
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